Unilever’s N43b tender offer closed

In from Success Alantee…
The £144.5 million tender offer by Unilever Overseas Holdings, the United kingdom-based foreign core investor in Unilever Nigeria, for the purchase of shareholdings of the minority shareholders in Unilever Nigeria has closed.
Unilever Overseas Holdings is seeking to increase its equity stake in Unilever Nigeria from 50.04 per cent up to a maximum of 75 per cent by buying additional shares from minority shareholders. The tender offer seeks to acquire about 942.42 million ordinary shares in Unilever Nigeria at a price of N45.50 per share in cash.
The tender offer, valued at about N43 billion or £144.5 million, was initially scheduled to close on Wednesday June 10, but was extended till today. Unilever Nigeria had stated that the extension was to give shareholders more opportunity to consider the tender offer and make up for the disruption caused by the fuel scarcity during the period of the offer.
Ripples.com.ng has confirmed that there would be no further extension of the acceptance period and the tender offer closed by the close of business Thursday, a reference to general office closure of around 6pm.
Reports have cited oppositions from Nigerian minority retail shareholders who had criticized the offer as self-serving and unfair. Shareholders’ leaders had said they would mobilize against the tender offer describing it as a disservice and another way to sideline Nigerians from the benefits of the company they had helped to nurture with their funds and patronage.
Shareholders said besides the unattractive offer price, giving the foreign investor undue control could short-change the minority shareholders citing the voluntary delisting of Nigerian Bottling Company (NBC) by the foreign core investors, who used their majority shareholdings to push through delisting of the iconic company.
But Unilever Overseas Holdings B.V, in a statement signed by its director Richard Hazell, said it was making the additional share acquisition as part of long-term strategic plan by the conglomerate as it believes that Nigeria offers significant growth potential.
“The Unilever Group has had a major presence in Nigeria for many years and continues to believe that the country offers significant growth potential. This makes Nigeria a strategic long term investment priority for Unilever Overseas. Globally, the Unilever Group is focused on investing in the foods, household and personal care categories and the long heritage and great brands of Unilever Nigeria in these categories in Nigeria make it attractive for Unilever Overseas to increase its holding in Unilever Nigeria, whilst maintaining its stock exchange listing,” Unilever stated in the statement enclosed in the tender offer.
The global conglomerate said that it has no current intention to delist Unilever Nigeria from the Nigerian Stock Exchange (NSE) noting that even with the free float requirement of the NSE, which requires a minimum of 20 per cent of the issued share capital of a public listed company to be held in the hands of the general public, the tender offer will not impact on the ability of Unilever Nigeria to remain listed on the NSE.
Unilever Overseas also does not intend making any changes to the board of directors or management of Unilever Nigeria as a consequence of the offer and the offer will not have any direct impact for employees, according to the statement.
The global conglomerate said it would continue to conduct dealings between the Unilever Group and Unilever Nigeria at arm’s length basis and Unilever Group will remain under no obligation to conduct its operations in Nigeria exclusively through Unilever Nigeria, subject to existing contractual commitments.
The statement however pointed out that the implementation of the tender offer will presumably result in a reduction of the free float of the ordinary shares and as such, dealings in ordinary shares following implementation of the tender offer will be lower than the date on which the acceptance period commences.
“Accordingly, it is possible that purchase and sell orders relating to ordinary shares will become more difficult to execute. In addition, the possible reduction in liquidity of the ordinary shares could lead to significant price fluctuations of ordinary shares that are available for trading in the future,” Unilever stated.
Unilever Nigeria has been struggling with rising financing expenses. While it witnessed considerable growth in its top-line and effectively curtailed its operating expenses in the first quarter, burgeoning financial expenses undermined the performance of the conglomerate during the period.
Interim report and accounts of Unilever Nigeria for the three-month period ended March 31, 2015 showed that while sales grew by eight per cent and the group reduced operating expenses by nine per cent, a double in financial charges within the three months overwhelmed the performance of the conglomerate.
Unilever Nigeria’s pre and post tax profits dropped by 21 per cent each, a situation that simultaneously cut basic earnings per share by four kobo from 20 kobo in first quarter 2014 to 16 kobo in first quarter 2015.
Key extracts of the unaudited report showed that sales rose to N14.91 billion in first quarter 2015 as against N13.83 billion recorded in comparable period of 2014. Financial charges jumped by 114 per cent from N381.6 million in first quarter 2014 to N817.91 million in first quarter 2015. With this, profit before tax dropped from N1.09 billion to N864.74 million while profit after tax slipped by same margin from N750.63 million to N590.45 million.
Key extracts of the audited report and accounts of Unilever Nigeria for the year ended December 31, 2014 showed declines in the top-line and the bottom-line. While sales were tepid, the bottom-line performance was however worsened by significant increase in finance charges.
Turnover dropped by seven per cent from N60 billion in 2103 to N55.75 billion in 2014. Interest expense, otherwise known as finance charges, however rose by 65 per cent from N1.16 billion to N1.91 billion. This further constrained the profitability of the conglomerate as pre-tax profit dropped by 58 per cent from N6.79 billion to N2.87 billion. After a 78 per cent reduction in tax provisions, net profit after tax dropped by 49 per cent to N2.41 billion in 2014 as against N4.72 billion recorded in 2013.
Earnings per share consequently dropped from N1.25 in 2013 to 64 kobo in 2014. The contraction also affected the company’s balance sheet as shareholders’ funds dropped by 20 per cent from N9.35 billion to N7.48 billion. In latest dividend payout, shareholders received a dividend per share of 10 kobo for the 2014 business year as against N1.25 received for the 2013 business year.

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